This page has been archived and commenting is disabled.

Gold As A Store Of Value

Tyler Durden's picture




 

For those with doubts after a nine-month correction in gold (and especially over the last few days), Brent Johnson of Santiago Capital reminds us that 'nothing has changed'. Starting from the three propositions that: 1) Money is extremely misunderstood; 2) 'Fiat' money is a poor store of value; and 3) Gold is an excellent store of value, Johnson provides, in a little under 10 minutes, a succinct summary of all the reasons to remain long the shiny yellow stuff. As it reverts to being 'the most marketable commodity' once again, with the 'good-as-gold' USD continuing to lose its purchasing power over time, Johnson provides some thoughts on the periods of deflation and how gold plays into that end-game: "If gold were not a good store of value, why do all the central banks of the world store it and hold on to it - even when crises abound?"

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 06/22/2012 - 14:21 | 2551870 Fips_OnTheSpot
Fips_OnTheSpot's picture

Barbaric! Must go polish some ounces now.. :D

Fri, 06/22/2012 - 14:25 | 2551891 veyron
veyron's picture

Am I allowed to stitch gold into my clothing even though I'm not jewish and it's not the 1930s?

Fri, 06/22/2012 - 14:35 | 2551899 Pladizow
Pladizow's picture

Must Read - Money: The Greatest Hoax on Earth - Merrill Jenkins - Published in 1971.

http://www.youtube.com/watch?v=pLwh9eMvcuc

To: Veyron - Yes and you may also be able to hide it in your foreskin!

Fri, 06/22/2012 - 14:37 | 2551944 NotApplicable
NotApplicable's picture

In other news, they just don't make Greek Finance Ministers like they used to.

http://www.google.com/hostednews/ap/article/ALeqM5jx_rPYghNofTaBSmyiqMWa...

Fri, 06/22/2012 - 14:40 | 2551955 AldousHuxley
AldousHuxley's picture

it is rigged.

Gold will go up along with inflation but government will special tax it so every transaction you actually lose money.

 

plus in general beware of any investment that is at 30 year highs.

 

bernanke is going to pull japan deflation on china in a few years after chinese dumb money overinvests in US assets. that's how US keeps coming on top, but deflation = gold prices sinking.

Fri, 06/22/2012 - 14:47 | 2551988 akak
akak's picture

"Deflation" under a fiat currency regime is merely a fantasy of the hopelessly brainwashed or the dishonest and desperate propagandists.  If that is the outcome you expect from this financial and monetary collapse, prepare to lose your life's savings, and don't cry later that you weren't warned.

Fri, 06/22/2012 - 14:51 | 2552011 GeneMarchbanks
GeneMarchbanks's picture

See: Minsky Moment but before you do make sure you understand EMT.

http://en.wikipedia.org/wiki/Endogenous_money_theory

If that doesn't do it for you: "If inflation is a monetary phenomenon, then hyper-inflation is a political one" --Hugh Hendry

Fri, 06/22/2012 - 14:59 | 2552035 francis_sawyer
francis_sawyer's picture

Granny is gonna get rich beyond her wildest dreams because with hyper DEFLATION [snark], her social security check will soon be able to buy her bricks & bricks of gold...

Yeah... that's the scenario I see... Keep telling yourself that and soon enough you'll think it's true...

Fri, 06/22/2012 - 15:01 | 2552045 akak
akak's picture

I'll take the hundreds of examples of fiat currency failure over thousands of years of monetary history over some egghead statist's ivory-tower academic theories with no basis in historical fact, thank you.

Fri, 06/22/2012 - 16:46 | 2552445 Captain Kurtz
Captain Kurtz's picture

Very interested in historical currency deflations that are relevant.  Could you humor me?

Fri, 06/22/2012 - 17:39 | 2552569 BooMushroom
BooMushroom's picture

There are very few examples of deflation, and no examples of hyperdeflation on Wiki: http://en.wikipedia.org/wiki/Deflation and there isn't even an entry for hyperdeflation.  the "debt deflation" page http://en.wikipedia.org/wiki/Debt_deflation lists NO examples.

Hyperinflation, however, has 32 historical examples, which start at four digit percentages, and end with numbers best expressed in scientific notation (i.e. Hungary post WWII = 89.7x10^21).

And, yeah, granny's pension and social security checks will NEVER buy her gold bullion, land, or private jets.

Fri, 06/22/2012 - 18:51 | 2552718 francis_sawyer
francis_sawyer's picture

or even catfood...

Sat, 06/23/2012 - 02:08 | 2553219 americhinaman
americhinaman's picture

japan... 30 years of deflation.  i don't care what CPI says, the yen cost of living has gotten cheaper and cheaper for over a generation, and japan has printed more money as a function of its economy than even greece.

Fri, 06/22/2012 - 15:09 | 2552071 fonzannoon
fonzannoon's picture

I am certainly steering clear of one investment at 30 year highs. Bonds.

Fri, 06/22/2012 - 15:40 | 2552174 AustriAnnie
AustriAnnie's picture

"government will special tax it so every transaction you actually lose money"

Just like it currently taxes all the black market cash transactions that take place daily? 

Fri, 06/22/2012 - 16:39 | 2552426 Ookspay
Ookspay's picture

Yes Annie, reality trumps theory everytime.

Fri, 06/22/2012 - 15:44 | 2552198 Quinvarius
Quinvarius's picture

The road to bankruptcy is paved with simple minded maxims heard on CNBC.  Deflation most certainly is not bad for gold.  In fact, if you actually understand the term deflation when used in the context of a fiat monetary system, you will also understand it makes the fiat currency lose value under the weight of defaults and not having an economy or tax base.

Fri, 06/22/2012 - 16:22 | 2552358 Ignorance is bliss
Ignorance is bliss's picture

Stupid idea: All the Gold would then leave the U.S. into Mexico, Canada, Caribbean Islands, etc... never to return. Then again sounds like something Washington would come up with.

Fri, 06/22/2012 - 17:09 | 2552496 sessinpo
sessinpo's picture

Deflation will happen regardless. It is not something BB or Japan pulled. Japan inflated tremendously for years to try to combat deflation. That is also what BB is doing because with massive debts, all the money that is newly created doesn't flow through the economy and create inflation across the board. Instead that money goes poof - it services the debt already on the books and only compounds the problem later on.

These are market forces and they eventually win no matter what monetary, political or fiscal games are played.

Fri, 06/22/2012 - 18:52 | 2552721 francis_sawyer
francis_sawyer's picture

The why aren't all the Japanese grannies UBER WEALTHY because of all the gold bullion they bought?

Sat, 06/23/2012 - 06:03 | 2553300 Disenchanted
Disenchanted's picture

 

 

 

"why do all the central banks of the world store it(gold) and hold on to it - even when crises abound?"

 

to control it, just like they control the fiat, fractional reserve currencies...

Fri, 06/22/2012 - 21:35 | 2552959 holdbuysell
holdbuysell's picture

Thanks for sharing.

My biggest take-away and eye-opener:

Putting those two in an MSM interview together back then would be similar to putting a Tyler and a rep of the Federal Reserve of St Louis in one today (Bullard?).

In fact, does this kind of debating ever happen today? Look at Bernanke's softball conferences. Ridiculous. I still want to know what that 'other' bucket on the balance sheet is that keeps growing.

How times have changed.

Fri, 06/22/2012 - 15:00 | 2552042 Freewheelin Franklin
Freewheelin Franklin's picture

No. But you can stitch your diamonds and rubies into your clothes if you are Russian royalty. 

Fri, 06/22/2012 - 15:21 | 2552101 GeezerGeek
GeezerGeek's picture

You can stitch gold into your clothing but then you have to stay away from deep water. It's one thing to have gold in your boat when it sinks, as you can always swim away. If the gold is in your clothing and the boat sinks, either you sink or you emerge from the water naked. maybe that's fine with you, but I'd hate to be laughed at that way.

Fri, 06/22/2012 - 16:41 | 2552432 Ookspay
Ookspay's picture

Shrinkage?

Fri, 06/22/2012 - 18:04 | 2552622 BooMushroom
BooMushroom's picture

Depends - I think I could manage to swim with an extra 32 ounces of gold.  That's a years salary, and plenty to get you started anywhere.  Not that I actually have two pounds of gold, of course.  You know with the boating accidents and all...

Fri, 06/22/2012 - 20:09 | 2552856 dark pools of soros
dark pools of soros's picture

one of these days you might spend that gold on some better boats..

Sat, 06/23/2012 - 06:31 | 2553315 Disenchanted
Disenchanted's picture

 

"It's one thing to have gold in your boat when it sinks, as you can always swim away."

 

what do you expect when you buy a concrete lifeboat?

 

 

Surviving The Apocalypse... In A Lifeboat

 

Fri, 06/22/2012 - 17:48 | 2552585 4horse
4horse's picture

"If gold were not a good store of value . . . " etc etc

and if the original version was really If I Were A Rot s child . . . 
 

then, bb, there only ever was one answer:
when it comes to that balance of books . . .

 

Tra Dish shun

http://www.youtube.com/watch?feature=player_detailpage&v=gRdfX7ut8gw

Tradition!

Fri, 06/22/2012 - 14:21 | 2551875 Roy Bush
Roy Bush's picture

How come Zerohedge never features Martin Armstrong's writings?

Fri, 06/22/2012 - 14:35 | 2551937 NotApplicable
NotApplicable's picture

Good question.

Fri, 06/22/2012 - 14:46 | 2551984 vortex
vortex's picture

Come on... Armstrong has been through all that pain because he stand in front of "the club", what did you expect?

Fri, 06/22/2012 - 14:50 | 2551999 THECOMINGDEPRESSION
THECOMINGDEPRESSION's picture

Some say Martin has lost his mind since he came out of prison. I believe he has been silenced. Jim Sinclair thinks the same.

Fri, 06/22/2012 - 16:07 | 2552298 Thisson
Thisson's picture

Because some of us don't like reading things written in crayon?

Fri, 06/22/2012 - 14:22 | 2551876 JimRogers
JimRogers's picture

CEO of Goldmail pushing gold.

 

Thanks ZH!

Fri, 06/22/2012 - 14:24 | 2551886 LoneStarHog
LoneStarHog's picture

Would you be interested in adding some INTELLIGENT discourse about what the person STATED, rather than attacking the person and his position?

Fri, 06/22/2012 - 14:27 | 2551901 JimRogers
JimRogers's picture

Couldnt get the presentation to play. So I can't comment on substance.

And your vociferous defense posted at 06/22/2012 - 14:24   of a 10 minute presentation posted at 06/22/2012 14:19 -0400 is pretty asinine.

 

You are evidence of a bubble.

Fri, 06/22/2012 - 14:29 | 2551905 Pladizow
Pladizow's picture

I'll take that bet!

Fri, 06/22/2012 - 15:58 | 2552259 Bring the Gold
Bring the Gold's picture

Riiiiight, just like the endless endless "we buy gold" and now "We buy silver" and even the occasional "We buy platinum" signs, and ads everywhere I fucking turn and all the proles and middle class selling into that. Yeah, when the shoe shine boy says sell grandma's gold, thats fantastic evidence of a bubble. Where would you put your money right now?

Fri, 06/22/2012 - 16:54 | 2552462 JimRogers
JimRogers's picture

Palladium futures, south sudanese pounds, short monolines and bitcoin, plus the typical BBB.

Fri, 06/22/2012 - 19:36 | 2552806 moonstears
moonstears's picture

GET OVER "BITCOIN", IT'S LIKE A FUCKIN' ETF, BASED ON GIGABITES.

 

Fri, 06/22/2012 - 14:29 | 2551904 disabledvet
disabledvet's picture

"Phuck you asshole."

Fri, 06/22/2012 - 14:45 | 2551980 Sandoz
Sandoz's picture

This is hillarious. This CEO argues that gold is a good store of value because: 1) money is misunderstood; 2) 'fiat' money is a poor store of value; and 3)  Gold is an excellent store of value.  Read that. Let it sink in. Is that not the most absurd argument you've ever read? And yet you're attacking the guy who's attacking this paid advertisement? 

 

Fri, 06/22/2012 - 14:49 | 2551993 Pladizow
Pladizow's picture

That was a summary - and I think the video which is not working, may elaborate - So Calm down.

Fri, 06/22/2012 - 14:59 | 2552039 JimRogers
JimRogers's picture

knave

Fri, 06/22/2012 - 15:35 | 2552161 lasvegaspersona
lasvegaspersona's picture

For an intellegent and much more elaborate discussion of the MoE and SoV aspects of currency and gold FOFOA is well worth the effort. He has posted several long pieces on the historical role of gold and analyzes some of the historical events that have changed those roles.

Fri, 06/22/2012 - 14:49 | 2551995 fonzannoon
fonzannoon's picture

jim rogers does not believe gold is a bubble. just a fyi jim rogers...

Fri, 06/22/2012 - 14:58 | 2552036 JimRogers
JimRogers's picture

You should totally believe everything you hear on CNBC and read on the interwebz.

 

Cause people are honest and generous with investment theses. Surely they would share any informational assymetry live on national television in exchange for $200 appearance fee.

Fri, 06/22/2012 - 15:07 | 2552062 fonzannoon
fonzannoon's picture

so i should get a krugman avatar and argue for monetary tightening on here? 

Fri, 06/22/2012 - 15:22 | 2552110 JimRogers
JimRogers's picture

Not sure your point, or if you have one, but I think you should keep your handle and avatar the way it is.

 

You are actually Arthur Fonzarelli right? 

Fri, 06/22/2012 - 15:29 | 2552141 fonzannoon
fonzannoon's picture

My point is why take the avatar of one of the main backers of gold and what it stands for and then take the other side. You claim he feels differently ...Oh wait you are at the secret meetings where your avatar spews the total complete opposite of what he says in public. Can you let me know when the next one is?

I know I know I am so ignorant in believing him or taking his word....thanks for your concern. You seem much more genuine.

Fri, 06/22/2012 - 15:44 | 2552196 lasvegaspersona
lasvegaspersona's picture

Fonz and Rogers

hopefully you are well beyond just believing what various people say. Get yourself a 'perspective' (have seen some good ones on ebay). Learn what to expect if your new 'perspective' is working right and compare new information to what your perspective has predicted. If your perspective predicts say "UP" but the world keeps going "DOWN' then you might need a better 'perspective'. Try a few out and soon you will stop listening to the daily diatribes of even smart guys like Jim Rogers. Who knows maybe some day you will preserve your wealth ...all because you saw what was coming......with you very own 'Perspective'.

you are welcome.....I got mine at blogspot...

Fri, 06/22/2012 - 15:55 | 2552204 JimRogers
JimRogers's picture

I didn't fade Beeland, I faded the lame video ZH posted.  Or tried to post.

 

I have no idea how JR is allocated nor portend to. You, on the otherhand seem to have knowledge of his holdings, or portend to.

 

Also, your second post doesn't have a point either. Just saying "My point is..." and then asking a question, doesn't mean you have a point. 

 

 

Fri, 06/22/2012 - 16:03 | 2552282 fonzannoon
fonzannoon's picture

My point was in the form of a question. I disregard grammer and spelling on here. It's very liberating. You go ahead and waste your time with keeping track if you wish.

So let's wrap this up. Your response to me claiming that Jim Roger's does not believe gold is in a bubble is that I should not believe what I hear on cnbc....thanks so much for the insight. Your brilliance is overwhelming.

Fri, 06/22/2012 - 16:04 | 2552287 fonzannoon
fonzannoon's picture

By ther way there should be a space between Jim and Rogers.

Fri, 06/22/2012 - 16:45 | 2552439 JimRogers
JimRogers's picture

"I disregard grammar,". "there should be a space."

#Ref!

Fri, 06/22/2012 - 16:37 | 2552417 JimRogers
JimRogers's picture

Huh?

Dude.

Gold is money. It's going higher, dunno how why or when, but it's a cheap and safe enough trade to wait it out.

But...

Retards defending a tautological gold commercial without even seeing it or knowing the speaker makes me question the thesis.

Fonz: keep rebutting contentions nobody made, and setting up strawmen. Just know all of us that aren't skin popping bath salts are laughing at you.

Fri, 06/22/2012 - 16:50 | 2552453 fonzannoon
fonzannoon's picture

You should read below for a refresher. You point about the video I actually agree with. It seemed odd however coming from a Jim Roger's avatar and so I made the comment below. To which you responded by deflecting, and you have been deflecting and back tracking ever since. Whatever...let's move on...

 

Me: "jim rogers does not believe gold is a bubble. just a fyi jim rogers..."

You: "You should totally believe everything you hear on CNBC and read on the interwebz.Cause people are honest and generous with investment theses. Surely they would share any informational assymetry live on national television in exchange for $200 appearance fee."

Fri, 06/22/2012 - 17:03 | 2552482 JimRogers
JimRogers's picture

You have no idea what JR thinks of gold. Despite what's said in books, or in chats with Maria Bartiromo.

Despite the honesty uber-wealth, self soveriegnty and a frontal lobe can bring, he didn't fleece the markets and crack a central bank by tipping his hand. 

Fri, 06/22/2012 - 17:19 | 2552523 fonzannoon
fonzannoon's picture

You are well spoken and you definitely watch a lot of cnbc for a guy that deems it dangerous. He does not believe it is a bubble. He is on record. He has been on record, and he has been correct. If his intent is to fleece me he really fked up because by listening to him 5 years ago I did a hell of a lot better than I would have elsewhere.

Congrats on your frontal lobe and your conspiracy theories and your sun tzu reading. I hope it serves you well.

Fri, 06/22/2012 - 15:23 | 2552111 JimRogers
JimRogers's picture

Double post

Fri, 06/22/2012 - 14:22 | 2551878 LoneStarHog
LoneStarHog's picture

Well...all Central Banks...except one.

Fri, 06/22/2012 - 15:46 | 2552209 lasvegaspersona
lasvegaspersona's picture

Lonestar....hust a guess but .338LM? with a fancy Hornady tip?

Fri, 06/22/2012 - 14:22 | 2551879 ghostfaceinvestah
ghostfaceinvestah's picture

Gold IS money, end of story.

Fri, 06/22/2012 - 14:30 | 2551913 disabledvet
disabledvet's picture

So are seashells.

Fri, 06/22/2012 - 14:32 | 2551925 Kreditanstalt
Kreditanstalt's picture

But a hell of a lot more people would trade stuff for gold than for seashells...

Fri, 06/22/2012 - 14:44 | 2551973 AldousHuxley
AldousHuxley's picture

power is money these days.

 

power to bail your self out

power to print money

power to get inside information

power to manipulate the system

power to control % of resources

power to sabatoge your competition

power to change the rules in your favor

 

 

ex-KGB didn't make money first, they got power first then monetized power over state assets into private wealth.

America is headed down that path with fiat currency being inflated away while power grows with increase in population.

Fri, 06/22/2012 - 14:35 | 2551935 ciscokid
ciscokid's picture

So is paper, worth nothing.

Fri, 06/22/2012 - 14:59 | 2552038 Colonel
Colonel's picture

No, it has its uses.

Sat, 06/23/2012 - 06:13 | 2553307 Disenchanted
Disenchanted's picture

 

 

 

it's great for starting fires and wiping asses...

 

but's it best put to use in ancient things called books.

 

Does a Kindle make good kindling? Not so much...

Fri, 06/22/2012 - 15:52 | 2552227 francis_sawyer
francis_sawyer's picture

 "So are seashells"

~~~

gee... I just took a bunch of seashells into my local coin shop the other day & got shut out...

What am I doing wrong?

Fri, 06/22/2012 - 17:12 | 2552506 sessinpo
sessinpo's picture

Take it to foreign shop that uses shells as currency. The point the original poster (and others) is that money is a man made concept and can take many forms. It is whatever is fashionable at the time as an exchange.

Fri, 06/22/2012 - 14:40 | 2551957 Marginal Call
Marginal Call's picture

Gold is a commodity.  Money is an idea. 

Fri, 06/22/2012 - 15:13 | 2552081 Kreditanstalt
Kreditanstalt's picture

Gold a "commodity"?  Like copper, wheat or aluminum?

Gold IS a commodity in the general sense only...as MONEY.

Fri, 06/22/2012 - 15:42 | 2552188 Marginal Call
Marginal Call's picture

Yeah, like copper.  They still make coins out of copper.    Or silver, which has 100X the industrial value.  

 

Gold's only value is it's scarcity, and the fact people like shiny shit.  So what is value and what is money?  Stored labor?-That would be oil.  In reality gold is just another trading vehicle like the S&P mini future.  But the whole point is that money is only a construct of the human brain that only exists if people believe in it.

Fri, 06/22/2012 - 16:05 | 2552288 Likstane
Likstane's picture

Could you name a country that produces silver or copper coins for general usage today?

Fri, 06/22/2012 - 16:30 | 2552391 Marginal Call
Marginal Call's picture

What do you thing USA quarters are made out of?  Nickel clad copper. 

 

And they mint tons of silver coinage, I don't care if it's not for general circulation.  They still make it.  And I have some.

Sat, 06/23/2012 - 02:14 | 2553224 Likstane
Likstane's picture

So then, you wouldn't mind trading some of your old silver quarters for some of my shiny new copper quarters, would you?

Sat, 06/23/2012 - 11:18 | 2553640 Marginal Call
Marginal Call's picture

Why, just a post ago you didn't think there were copper coins anymore.  Presumably because of pennies.   If you're any indication of the quality of investor that the PM market has reached, it's time to take some profits. 

Fri, 06/22/2012 - 16:13 | 2552325 Thisson
Thisson's picture

No, you are wrong.  Gold's value is not that it is scarce.  In fact, gold is not scarce at all.  Yes, Gold is a commodity.  But gold's value is that of all the materials in the world that can be used for money, it is the best, because of its intrinsic properties, including, among others, that it is inert, easily divisible, transportable, and easily authenticated.  In short, nothing works better as money than gold

Fri, 06/22/2012 - 16:36 | 2552413 Marginal Call
Marginal Call's picture

I understand why it's used.

But you if you think that it's "not scarce at all" and it's valuable because it's "that it is inert, easily divisible, transportable, and easily authenticated" then you're insane. Copper, silver, and lead all fit that description as well.

But we don't use those because there is a shit ton of it. In fact, gold is really fucking rare and is formed when a star goes super nova.

Still, money is an idea. You'll all find out if the world goes wild west.

Fri, 06/22/2012 - 15:15 | 2552083 CrashisOptimistic
CrashisOptimistic's picture

Not quite.

Beyond food and water, "Value" is just an idea.

You can't eat either money or gold.

This clamoring to buy real, tangible assets makes no sense beyond farmland. 

That includes stocks.  That includes bonds.  And it includes gold.  The value of those items exist only in your mind.  The value of farmland exists in your stomach.

Fri, 06/22/2012 - 15:50 | 2552222 lasvegaspersona
lasvegaspersona's picture

Crashis

Farmland if OK but if you are looking for the best protection I'd go with gold. 

Fri, 06/22/2012 - 16:00 | 2552266 Marginal Call
Marginal Call's picture

No.  You buy shit that enables your survival.   That means farmland.  

 

You see, preparing for society to collapse you need a food source, a water source, and shelter, and then "money".  You sound like you're going to go with "money" and hope somebody with farmland will sell you food.  But what you're not factoring in is that in a total collapse we are going back to oxen power and there will be little in the way of space production.

 

 

Fri, 06/22/2012 - 17:52 | 2552601 juslen
juslen's picture

So in a total collapse, there will be mass starvation? Sorry, you can't return to oxen power without killing a large percentage of the worlds population. Believe it or not, currencies can collapse, labor and resources will still remain. So long as this collapse doesn't involve massive shortages of oil, natural gas and other forms of energy the collapse will merely be a monetary collapse. Please tell me, how long did it take for Gernamy to recovery from hyperinflation? What about Argentina? The fact is.. a financial collapse is far diffferent than a total collapse that would involve people returning to horse and buggies. Pick up a god damn history book or economic textbook. What happened when the Soviety Union collapsed? Believe it or not, people in Russia still drive cars and use modern farm equipment. When you have a currency crisis and a financial collapse, people will suffer, there will be food and energy shortages and many people will lose everything. And because gold has value as a medium of exchange, people who have gold will be able to trade it for other goods and services. I don't give a shit if you have farm land. Good lucky trying to barter crops for other things like fuel, equipment and resources that you cannot produce yourself. Funny how money works...

Fri, 06/22/2012 - 19:52 | 2552833 Marginal Call
Marginal Call's picture

Sorry boss.  I'm preparing for a world without oil.  And war, and chaos.  

 

Hope for the best, prepare for the worst.  So I'd tell you to "pick up a god damned history book"  and compare the exponential population growth over lapping energy consupmtion.  We're in a superspike.  Over run.  Due for correction. 

 

Fri, 06/22/2012 - 23:06 | 2553063 Overfed
Overfed's picture

You may be preparing for a world without oil, and one day we'll get one. When that time comes, you had better believe that there will be a whole lot of war and chaos.

Fri, 06/22/2012 - 23:10 | 2553068 Overfed
Overfed's picture

I like to think of gold or silver like a battery or even a capacitor. It can be charged up (via your labor, or profits or whatever) and store that energy. Later that stored energy can be traded for some other form of stored energy.

No matter how crazy the world becomes, there will always be some kind of trade. Gold, silver, food, and fuel will be universal currencies.

Sat, 06/23/2012 - 11:29 | 2553666 Marginal Call
Marginal Call's picture

You are correct.  But as they say here out west, whiskey's for drinkin', water's for fightin' over.   And in a world where industry has broken down you will find that many things aren't available for sale at any price.  If I have the last shovel, and you have a gold coin guess what-no shovel for you.  There will be trade, and the items you listed will be exchanged as currency (I'd add tools to the list), but there when there is no surplus of goods or much spare capacity in agriculture (used to be >50% labor force/will be again) gold and silver will only go so far.  I think people have confused my points to be anti-PM, when I'm merely pointing out limitations.

Sun, 06/24/2012 - 18:47 | 2556544 BigJim
BigJim's picture

Do you think the supply of oil, natgas, and coal will just vanish overnight?

You think the Saudis and Kuwaitis and Russians won't have excess supplies (ie, produce more energy than they can consume) and not want to sell the surplus? And that they won't want PMs in exchange for them?

You appear to envisage an overnight mad max scenario. If this is what you believe, you shouldn't be buying farmland - you should be buying surplus armored personel carriers, assault rifles and claymores, and then, after the hammer falls, offering your 'protection' services to whichever group of farmers offers the most share of their production in exchange.

Fri, 06/22/2012 - 14:23 | 2551883 Marginal Call
Marginal Call's picture

What's with the "thanks for becoming a gold mail customer" video?  Wrong link?

Fri, 06/22/2012 - 14:24 | 2551885 seamus3500
seamus3500's picture

what's the gold oz to spiderman towel ratio?

Fri, 06/22/2012 - 14:32 | 2551923 Pladizow
Pladizow's picture

Depends upon what you have used the towel for!

Fri, 06/22/2012 - 16:26 | 2552373 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

Hitch-hiking the galaxy...

Fri, 06/22/2012 - 14:24 | 2551890 q99x2
q99x2's picture

Boy that last article disappeared faster than a frozen flake of CO2 on a hot plate.

Fri, 06/22/2012 - 14:27 | 2551894 It is a bargin ...
It is a bargin my friend's picture

I'm listening a guy called "Brent" which is an oilfield over here telling me what I already fucking know, I don't want plaittudes anymore or a comfort blanket or constantly re assuring about this fucking mess I want change and i want it NOW

Fri, 06/22/2012 - 14:26 | 2551895 i8emallup
i8emallup's picture

Nice advert for the man's gold book. 

The fact that a central bank holds a particular asset don't make no nevermind to me.

Fri, 06/22/2012 - 14:57 | 2552031 Biosci
Biosci's picture

junked for ridiculous url

Fri, 06/22/2012 - 15:56 | 2552248 moonstears
moonstears's picture

Don't hate me 'cause MY url's bigger than YOURS.

Sun, 07/08/2012 - 17:18 | 2596830 Angus McHugepenis
Angus McHugepenis's picture

Junked again for blaming a huge URL. Ah fuck it, I'll junk myself for replying to that huge URL post.

Fri, 06/22/2012 - 15:27 | 2552131 GeezerGeek
GeezerGeek's picture

Didn't Moses feed gold to the Hebrews while in the desert? Since it was from a golden calf, perhaps he added tomato sauce and cheese to help it go down more easily.

Fri, 06/22/2012 - 14:26 | 2551897 flying dutchmen
flying dutchmen's picture

central banks were selling it in mass in the 90's and now are back in the market.. so i would never do what a central banker is doing. they know fuck about money other than they can allways print more.   Is gold a good store of value Yes it is..  is it a great investment  not really  long term..  productive assets are better investments ( as long as you dont have scumbag management draining all the profits).

Fri, 06/22/2012 - 15:01 | 2552040 Alpha Monkey
Alpha Monkey's picture

Gold is an instrument of saving.  You invest in gold to preserve your wealth.  When the economy is functioning in a healthy maner, then the "productive assets" can be considered a wiser choice.  However, when the economy's of the world are breaking down, and all levels of society are more concerned with how to protect themselves rather than become educated on and help resolve the problems, then it's time to consider how to best weather the storm.  Thankfully, the simple act of self preservation is an effective tool for cleansing.  People pulling money from the banks will result in bankers being exposed as nothing more than leaches when their inability to profit through sound business decisions causes them to suck even more tax payer money down the drain.  Bankers reaching for more money will simply cause more public awareness and the feedback loop will eventually force one side to take action.  Either the people rise up and take back their government (including starting a new one) or the bankers rise up and use every force in the police state to maintain their dominance.  Either way, it spells change, but only one way results in healthy markets worth investing in.  In the mean time, I hold my money in gold and the government can print all they want, they can't get my money.  I have a feeling, others will follow the path of self preservation and be drawn by the glimmer of gold.

Fri, 06/22/2012 - 14:28 | 2551902 q99x2
q99x2's picture

'Someone's team is there to help'

And I just stepped off of the banana boat.

Fri, 06/22/2012 - 14:29 | 2551903 BLOTTO
BLOTTO's picture

The illusion is NOT for us PM Gold/Silver stackers and TPTB are spending BILLIONS of dollars trying to conspire against us 1-2% that have it...

NO -

The illusion of reality is for the easy prey -

the sleeping,

not capable of independent thinking,

zombified,

fixated on useless gadgets,

consuming - MASSESS!

 

Fri, 06/22/2012 - 14:30 | 2551909 dereksatkinson
dereksatkinson's picture

Am I the only one having trouble getting the video to load?

 

Fri, 06/22/2012 - 15:45 | 2552199 Mr. Fix
Mr. Fix's picture

It worked for me.

Fri, 06/22/2012 - 14:30 | 2551910 lolmao500
lolmao500's picture

As a store of value... as long as the government or the TSA doesn't steal it all from you...

Fri, 06/22/2012 - 15:09 | 2552072 xela2200
xela2200's picture

Same thing can be said for land, currency or any other asset. At least Gold is easier to hide and more portable.

Fri, 06/22/2012 - 17:47 | 2552582 Angus McHugepenis
Angus McHugepenis's picture

There is much debate as to whether farmland or gold & silver is a good investment and a good store of value. I buy gold & silver for one reason only. I don’t have to REGISTER the transaction with the government and I don’t need put a license plate on it.

Anything REGISTERED with the government (including your children!) can be taken away from you at any time. Think you own your vehicle? Nope, just ask the cop who had it towed away. Think you own your land even though you paid for it in cash? Nope, just ask the local politicians who evicted you for non-payment of property taxes. And the list goes on.

True ownership of anything is something you have that cannot be taken from you unless it is stolen from you outright because your big mouth told the thief where to find it. I repeat, anything REGISTERED with the government is NOT YOURS… it is theirs, and you get the privilege of paying for it and using it under the illusion that you own it.

Do any of you think that just because your remote mountain cabin with 2 acres of productive veggie crops is so far off the beaten path that it won’t be taken from you in a SHTF scenario? (for the good of all the people, of course). You could be on the moon… the government still knows where you are. But they won’t know where your gold & silver is stashed unless you tell them.

Fri, 06/22/2012 - 14:30 | 2551911 GlomarHabu
GlomarHabu's picture

The current market makes no sense at all. With very few exceptions the Krugmans of the world are woefully challenged to explain anything. We are fortunate to have Tyler and others set the record straight againt very strong institutional headwinds.

However, F. Bastiat knew best when he wrote:

"In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause - it is seen. The others unfold in succession - they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference - the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse. Hence it follows that the bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, - at the risk of a small present evil."

Fri, 06/22/2012 - 14:30 | 2551912 LawsofPhysics
LawsofPhysics's picture

Anything that has intrinsic value for barter, survival or maintain/improving the quality of one's life that can not be stolen by paper-pushers, will have intrinsic value.  I see it is still obvious day on ZH.

Fri, 06/22/2012 - 14:32 | 2551927 fuu
fuu's picture

Umm I stack, but this is a commercial for a newsletter. Wtf?

Fri, 06/22/2012 - 16:33 | 2552389 fuu
fuu's picture

Now that the video is actually playing I see there isn't a whole lot of new info in there. Pulls it all together nicely though.

Fri, 06/22/2012 - 14:35 | 2551932 hedgehog9999
hedgehog9999's picture

"Nothing has changed"

I beg to strongly disagree. My account has changed A LOT up and down.

Right now I am out and looking for a decent entry soon.

Bottom line is if your timeframe is 5 years or armageddon whichever comes first and you don't care about drawdowns in your account then go for it otherwise be very cautious and trade the hell out of it as best you can...........

I don't know how many time I 've heard the bottom is in over the last 3 months by the permabulls...............a lot of dead money sitting out there...

Fri, 06/22/2012 - 14:44 | 2551975 ddtuttle
ddtuttle's picture

I'd rather have dead money than shrinking money.  That's the whole point.  Gold holds its value, which is why its a good store of value.  Only when gold supply and demand get out of whack in a fear-episode or panic, the price goes up even more than underlying inflation. Betting on that is a different thing altogether, that'st a bet on speculative events.

If you're in gold because you think there's going to be a panic, and ahuge price jump, you need to be patient.  If you're not patient, then you're the one panicing.

Fri, 06/22/2012 - 14:36 | 2551939 akak
akak's picture

Anyone who would idiotically and/or disingenuously imply or state that gold is a poor store of value (in a depreciating fiat currency environment) would have to necessarily also accept the conclusion that gold has become cheaper  in value (not price) over the long term, which it demonstrably has not become.

Fri, 06/22/2012 - 14:58 | 2552033 akak
akak's picture

Where the fuck are these idiotic and anonymous downarrowing junkmonkeys coming from?  I state an unassailable logical proposition, and get two downarrows for it?  WTF?

Fri, 06/22/2012 - 15:16 | 2552090 fonzannoon
fonzannoon's picture

Akak I see a lot of extremely intelligent people on here say some amazing things that I take note of. Then I see the same people get defensive that some idiot gave them a down arrow like this is facefart or something. Who cares?

Fri, 06/22/2012 - 15:21 | 2552106 fonzannoon
fonzannoon's picture

who the fk just junked me?!

Fri, 06/22/2012 - 16:32 | 2552401 centerline
centerline's picture

LOL.  I presented a physics equation once as a retort and got junked.  

Fri, 06/22/2012 - 16:48 | 2552449 CCanuck
CCanuck's picture

I junk'd ya for say'n retort........secret word of the day, yesterday.

Sat, 06/23/2012 - 00:03 | 2553120 BigDuke6
BigDuke6's picture

 

 

The ego's have landed.

 

Fri, 06/22/2012 - 16:45 | 2552440 CCanuck
CCanuck's picture

You are gett'n "Super Junk'd".........stop bitch'n about gett'n junk'd.. after all there is lots'o Junk out there.

"Get Junk'd Day"

Ccanuck

Fri, 06/22/2012 - 16:23 | 2552365 GlomarHabu
GlomarHabu's picture

 Who cares?

Apparently you do. Let it roll off. Some people just love mucking up posts. Stay frosty.

Fri, 06/22/2012 - 15:19 | 2552097 web bot
web bot's picture

Hey Mr. A... Theyr'e just a bunch of ass-creatures that crawl out of the sewers on Fridays.

I'd like Robomoron to actually write an article like out little buddy L use to do... then we'd have a chance to expose him for what he really is. Just an ADHD two-bit troll who's probably living in his mommy's basement because he can't affort a real pad... or hold down a real job.

Fri, 06/22/2012 - 15:57 | 2552255 XitSam
XitSam's picture

The forcefulness of your logic forced them to reevaluate their position and it made them temporarily angry so they lashed out.  Or maybe you just used today's secret word.

Fri, 06/22/2012 - 16:40 | 2552419 CCanuck
CCanuck's picture

I junk'd him for saying Junkmonkey.........shh..... it's the secret word today.

 

Edit; I gave you +1 for first statement

Fri, 06/22/2012 - 16:11 | 2552316 Likstane
Likstane's picture

@ akak-I junked you because you bitched about being junked.

Sat, 06/23/2012 - 08:48 | 2553399 pyrat
pyrat's picture

No worries.... you can't help stupid.

Sat, 06/23/2012 - 04:52 | 2553270 americhinaman
americhinaman's picture

over any lifetime horizons i've measured (i'll define as 75 year intervals), gold has held or increased it's "value", which i'll equate roughly to "real" price.  but quite obviously, it has not held it's value over generational horizons (i'll define as 25 years).  a generation is "long term" to anyone, and the example is obvious because almost all of us have lived through the period.

let's say you owned some gold in 1980 when the price pushed into the high 600s in USD.  if you thought gold would continue to be a great store of value for the long term even from that point, then you held on.  if you didn't have any, perhaps you bought some.  fast forward a generation.  in 2005 your gold was worth nominally 35% less, and in CPI-adjusted terms worth 73% less.  the max drawdown in nominal terms was around 62% in nominal terms (19 years later, 1999), and 83% in CPI-adjusted "value" terms (21 yrs later, 2001).  AND that's using a systematically downward-biased government CPI figure... with a true, higher inflation measure, the maximum drawdown in value terms was probably closer to 90%.  against a real asset class that outperformed CPI (how about housing over that period?), you probably could buy only 5% of the house in 2000 that you could have in 1980 with the same ounces of gold.  to make it easier to think about, imagine 1000 ounces of gold.  in 1980, you could have bought 650,000 USD worth of house.  in 1999, you could only buy 250,000 USD worth of house.  during those 19 years, home prices increased very quickly... 650,000 in 1980 was something larry ellison might have bought; 250,000 in 1999 was something a burger flipper at mcdonalds might have bought.  so by not selling your 1000 ounces and converting into a house, your home converted from a mansion in any community you want, to a very median home.  anyone who held gold over that period got wiped out in real purchasing power, whether in homes or any other real consumption good.

gold price since 2000 has done the opposite and rallied massively in nominal or real terms... unfortunately to anyone who held or bought gold from 1980 to date, you would still be down 19% in CPI-adjusted terms.

the fact that gold, when bought/held at nominal highs, can lose nearly 90% of its value over a generation of our lives... AND the fact that most of us have lived through this period, is why so many people do not buy gold here, at prices that are just 20% from the highs.

the question is where are we now?  or to make the analogy tighter, was gold last year (spiking through 1900 usd/oz) priced more like 1980 or more like 2000?  there are strong arguments for both.  it's more like 1980 in the sense that the price had indeed rallied tremendously, ostensibly due to fear of inflation or monetary debasement.  it is more like 2000 in the sense that inflation recently has been closer to the level of 2000 than 1980 (true inflation has always been higher than CPI, but for reference CPI was ~2% in the 2000s and maxed out ~15% in the early 1980s).  it looks to me as if gold price has moved in response to a fear of something that hasn't happened yet.

thoughts anyone?  are we back in 1980 or back in 2000?

 

 

Fri, 06/22/2012 - 14:39 | 2551941 RobotTrader
RobotTrader's picture

Gold is definitely money.

 

However, the value of it can fluctuate wildly, as high as $1,800, as low as $800.

The "Almighty U.S. Dollar" value is stable as a rock.  In fact, as of late, it has been dramatically increasing in value compared to a commodity basket or compared to other currencies.

Gold cannot maintain a steady value relative to other currencies and commodity items, therefore it is deemed to be a "Risk Asset".

Way too volatile to be ever accepted as a currency, except for emergencies.

And in an emergency, you are typically forced to sell it at the worst possible time and worst possible price.

What you can get for it is entirely depenedent upon the paper market price which is pushed around by Algo/Igor/Robo machines, which can change day to day, month to month, with huge volatility.

Who the hell needs to deal with that kind of brain damage?

Any wonder why the U.S. Dollar is the "Reserve Currency of the Century?"

Fri, 06/22/2012 - 14:40 | 2551954 Dasa Slooofoot
Dasa Slooofoot's picture

Are you a wizard?

Fri, 06/22/2012 - 14:59 | 2552037 Biosci
Biosci's picture

in LARP-land, probably

Fri, 06/22/2012 - 15:22 | 2552102 francis_sawyer
francis_sawyer's picture

Everyone's favorite graphic (to go along with Robos 'Reserve Currency of the Century')...

~~~

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/06/Reserve%20Currency_1.png

Fri, 06/22/2012 - 16:16 | 2552339 Bansters-in-my-...
Bansters-in-my- feces's picture

I was thinking Fucktard.

Fri, 06/22/2012 - 14:43 | 2551967 Tinky
Tinky's picture

  "Way too volatile to be ever accepted as a currency..."

see this 20 year chart for graphic evidence of the absurdity of the above claim:

http://mtanga.com/gold20yr.png

Fri, 06/22/2012 - 14:46 | 2551982 GeneMarchbanks
GeneMarchbanks's picture

'Gold cannot maintain a steady value relative to other currencies and commodity items, therefore it is deemed as a "Risk Asset".'

It can. The problem is that gold is increasingly being purchased by idiots who only hoard it and forget that to bring about change in the monetary you have to also get others to actually transact with it in the 'real' economy.

Starting with silver would go a long way to bring about this change.

Fri, 06/22/2012 - 14:50 | 2552006 FranSix
FranSix's picture

The facts are really as follows:

Gold is a tier 1 asset.

Commodities have declined over time relative to gold.

The dollar has not been stable, in fact it has steadily declined, losing purchasing power in the last ten years to the tune of 30%, as inflation has increased over this time.

That means that commodities, unlike gold, have lost value in a declining currency.  This will affect all commodities producers, as their Net Present Value decines against inflation, and their Internal Rates Of Return decline.

With banks tied solely to fallible currencies, their rates of return are dependant on short term interest rates being maintained above inflation to be sure that they remain solvent.  They're all being bailed out to the tune of trillions in capital injections to make up for the shortfall.

Even government bonds, though their prices have risen, have not provided a stable return because their yields and their prices have fallen behind inflation, causing pensions funds to go broke.

You can reliably say that pension funds, banks, governments and central banks will have to eventually rely on gold.

Fri, 06/22/2012 - 16:24 | 2552366 Thisson
Thisson's picture

I agree on all except your last conclusion, as gold provides no yield, and pension funds all need a yield of about 8% to meet their expected obligations.

What are the pension funds going to do, buy gold and write covered calls against it for income?  I don't see that happening in the near future.

Fri, 06/22/2012 - 17:52 | 2552595 FranSix
FranSix's picture

If I may point out, pensions funds are backing huge commodities depots and warehouses-full in the hopes this will store value better than the miners, all in defiance of your special objection to providing no yield.

Would you care to explain why they might want to jump on the hoarding bandwagon?

 

http://scharts.co/LrKbgN

 

-F6

 

 

Fri, 06/22/2012 - 14:52 | 2552013 dexter_morgan
dexter_morgan's picture

Ben, give it up already.

Fri, 06/22/2012 - 14:55 | 2552022 akak
akak's picture

 

The "Almighty U.S. Dollar" value is stable as a rock.

I guess that is why real (non-BLS bullshit CPI) consumer prices continue to increase ~8% per year, right?

More crap from RobotLemming, who never met a statist or central banker that he didn't like.

 

(For the record, though, I strongly suspect that RobotLemming is merely "Tyler" fucking with us for shits and giggles.  He should know, though, that doing so does nothing to enhance the reputation of this site.)

Fri, 06/22/2012 - 15:00 | 2552043 docj
docj's picture

Indeed - I was actually looking forward to reading HoboTrader's latest silliness but couldn't get past that sentence before I spewed all over my keyboard.

Fri, 06/22/2012 - 16:01 | 2552271 XitSam
XitSam's picture

"Gold cannot maintain a steady value relative to other currencies and commodity items, therefore it is deemed to be a 'Risk Asset'."

Sigh. You have it backwards. Fiat currencies cannot maintain a steady value relative to gold. Gold is the reference.

Fri, 06/22/2012 - 16:06 | 2552296 css1971
css1971's picture

One of the charts I pull in on my home page... Not so stable.

http://bit.ly/LH9Uxe

You have your perspective wrong, it is the fiat money which is changing wildly in value, not stocks or commodities or gold. Primarily because the mighty dollar is 95% debt. The leverage causes massive swings.

 

Fri, 06/22/2012 - 16:58 | 2552472 GrinandBearit
GrinandBearit's picture

Robo idiot says:  The "Almighty U.S. Dollar" value is stable as a rock.  In fact, as of late, it has been dramatically increasing in value compared to a commodity basket or compared to other currencies.  Gold cannot maintain a steady value relative to other currencies and commodity items, therefore it is deemed to be a "Risk Asset".

You truly are blithering idiot.

Do NOT follow this link or you will be banned from the site!